Court rejects Foundation of Independent Financial Advisors' claim for commission post-winding up, clarifies payment rules under SEBI regulations.

The court dismissed the Foundation of Independent Financial Advisors' application for claiming commission for financial advisors/distributors under Regulation 52 of SEBI (Mutual Funds) Regulations, 1996. The court clarified that commission is only applicable when the scheme is operational and not post the publication of winding up notices, highlighting the cessation of business activities post such notices under Regulation 39(3)(b). The court also rejected FIFA's claims for fees and expenses post winding up notices, emphasizing that such payments are only allowable when the scheme is in operation, not post the cessation of business activities. Additionally, the court refuted FIFA's claim for commission payment post 23rd April 2020, stating that commission is not 'due and payable under the scheme' post winding up. The court dismissed FIFA's application based on these reasons, without awarding any costs.

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Issues:
1. Claim of commission by independent financial advisors/mutual fund distributors under Regulation 52 of SEBI (Mutual Funds) Regulations, 1996.
2. Interpretation of Regulations 52, 39, 40, and 41 regarding expenses and payments post winding up of schemes.
3. Entitlement of mutual fund distributors to commission post publication of winding up notices.
4. Application of Circular dated 22nd October 2018 in relation to payment of commission.
5. Liquidation expenses borne by Franklin Templeton Trustee Services and Asset Management.

Analysis:
1. The judgment dismisses the application filed by the Foundation of Independent Financial Advisors (FIFA) claiming commission for financial advisors/distributors under Regulation 52 of SEBI (Mutual Funds) Regulations, 1996. The court highlights that commission is applicable when the scheme is operational and not post the publication of winding up notices, emphasizing the ceasure of business activities post such notices under Regulation 39(3)(b).

2. The court rejects FIFA's contention that asset management companies are entitled to fees and expenses post publication of winding up notices under Regulation 39(3)(b). It interprets Regulations 40 and 52 harmoniously, stating that fees and expenses are allowable only when the scheme is in operation, not post the ceasure of business activities.

3. FIFA's claim for commission payment post 23rd April 2020 is refuted by the court, stating that commission is not 'due and payable under the scheme' post winding up. The judgment clarifies that distributor commission is not payable if unitholders redeem units and winding up triggers similar effects.

4. The court addresses FIFA's reliance on the Circular dated 22nd October 2018, emphasizing that post publication of winding up notices, trail commission is not payable. The Circular aims to enhance transparency in expenses and does not confer rights on distributors to claim expenses post winding up under Regulation 41(2).

5. Franklin Templeton Trustee Services and Asset Management's affidavit regarding bearing liquidation expenses is acknowledged by the court, noting that such expenses are not intended to be charged to the six schemes in the interest of unitholders. The judgment dismisses FIFA's application based on the above reasons, without any costs awarded.

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